Year 501 (13 page)

Under current conditions of power and control, selective free trade will tend to drive the level of existence to the lowest grade for people who are spectators, not participants in the decisions that affect their lives. The basic thrust is well-described by Andrew Reding: “Unable to impose its agenda on a ‘gridlocked' Congress that, however imperfectly, still responds to civil society (‘special interest groups'), the Bush administration is linking up with like-minded elites abroad in an effort to legislate from without,...constructing what amounts to international government, though a peculiar form thereof in which only business and trade representatives have any voice”; “Under cover of free trade, foreign governments and businesses are gaining an effective veto over national, state, and provincial legislation that elevates human welfare.” There is, however, nothing in the least “peculiar” about this pursuit of the vile maxim of the masters, adapted to the current age.
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The maxim requires a slight amendment: “all for themselves
now
.” The longer term is as irrelevant as other people. Thus in a lead news story, the
Wall Street Journal
hails George Bush's “extraordinary coup” in compelling the entire world to abandon plans for a meaningful agreement on greenhouse gases at the June 1992 Rio conference. Someone more clever than I could pen a wonderful story or cartoon on the final edition of the
Journal
, going to press with a passionate editorial demonstrating that global warming is a left-wing fraud just as the rising sea level engulfs the corporate headquarters.
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Overall, the 1980s accelerated a global rift between a small sector enjoying great privilege, and a growing mass of people suffering deprivation and misery. Though superfluous for wealth production or consumption, the only human functions recognized in the dominant institutions and their ideology, these people must be dealt with somehow. Current social policy in the US is to coop them up in urban centers where they can prey upon one another; or to lock them in jail, a useful concomitant of the drug war (see chapter 4.3).

The internationalization of capital that has accelerated since 1971 gives a somewhat new character to competition among national states. To cite one indication, while the US share in world exports of manufactures declined 3.5 percent from 1966 to 1984, the share of US-based TNCs slightly increased. And international trade patterns yield a very different picture if imports from overseas subsidiaries are counted as domestic production. Foreign affiliates increased their share of total exports of manufactures by US-based firms from under 18 percent in 1957 to 41 percent in 1984. “If such foreign production could be brought back to the United States,” Richard Du Boff observes, “the nation's exports would double, according to some Commerce Department projections.” A 1992 World Bank study reports that “intra-firm trade within the largest 350 [TNCs] contributed about 40% of total trade. More than a third of US trade is between foreign affiliates and their U.S.-based parents.” Over half of Malaysia's exports to the US were from US affiliates, Taiwan's five leading electronics exporters are US firms, 47 percent of Singapore's exports in 1982 were by US-owned firms. “Similarly, exports of electrical goods by Japanese producers in Korea had much to do with the rise of Korea in world electronics.” “So all the textbook trade theory about comparative advantage and the virtues of frictionless open trading systems is nonsense,” Doug Henwood observes, noting that the current estimates are probably higher than these figures, from the early 1980s: “Several hundred economically and politically powerful corporations with global networks dominate trade largely on their own terms, and then serve as their governments' advisors on trade strategy.”

Commercial products reflect these tendencies; to take one example, almost a third of the market price of a GM Pontiac LeMans goes to producers in South Korea, over a sixth to Japan, about the same to a combination of Germany, Singapore, Britain, Barbados, and others. As a social entity, the country and most of its population may decline; the corporate empires are playing a different game, based on the theological doctrine that the masters have the right to make investment decisions, unencumbered by concerns of their servants in workplace and community. With somewhere between one-quarter and one-half of world trade already conducted within North-based TNCs, these are factors of growing importance as we look towards Year 501.
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6.The New Imperial Age

The realities are often presented with admirable frankness by the rulers and their ideologists. The London
Financial Times
features a lead article by the economic correspondent of the BBC World Service, James Morgan, under the heading: “The fall of the Soviet bloc has left the IMF and G7 to rule the world and create a new imperial age.” We can, at last, approach the fulfillment of Churchill's vision, no longer troubled by the “hungry nations” who “seek more” and thus endanger the tranquility of the rich men who rule by right.

In the current version, “The construction of a new global system is orchestrated by the Group of Seven, the IMF, the World Bank and the General Agreement on Tariffs and Trade (GATT),” in “a system of indirect rule that has involved the integration of leaders of developing countries into the network of the new ruling class”—who, not surprisingly, turn out to be the old ruling class. Local managers can share the wealth, as long as they properly serve the rulers.

Morgan takes note of “the hypocrisy of the rich nations in demanding open markets in the Third World while closing their own.” He might have added the World Bank report that the protectionist measures of the industrial countries reduce national income in the South by about twice the amount provided by official, largely export-promotion, most of it to the richer sectors of the “developing countries” (less needy, but better consumers). Or the UNCTAD estimate that
non-tariff
barriers (NTBs) of the industrial countries reduce Third World exports by almost 20 percent in affected categories, which include textiles, steel, seafood, animal feed and other agricultural products, with billions of dollars a year in losses. Or the World Bank estimate that 31 percent of the South's manufacturing exports are subject to NTBs as compared with the North's 18 percent. Or the 1992 report of the UN Human Development Program, reviewing the increasing gap between the rich and the poor (by now, 83 percent of the world's wealth in the hands of the richest billion, with 1.4 percent for the billion at the bottom of the heap); the doubling of the gap since 1960 is attributed to policies of the IMF and World Bank, and the fact that 20 of 24 industrial countries are more protectionist today than they were a decade ago, including the US, which celebrated the Reagan revolution by doubling the proportion of imports subject to restrictive measures. “And the upshot of decades of lending for development is that poor countries have lately been transferring more than $21 billion a year into the coffers of the rich,” the
Economist
observes, summarizing the gloomy picture.

Individual cases fill out the details: for example, the quotas imposed by the US, UK, and France on their commercial rival Bangladesh, on grounds that its textiles threatened local industry; as the
Financial Times
puts it, “The Bangladesh government has been particularly stung by a US decision to impose anti-dumping duties of up to 42 percent on shop towels,” imports that “amounted to a princely $2.46 [million]” from “one of the poorest of nations.” Or the dumping of highly subsidized US and EC wheat and beef surpluses in Mali, Burkina Paso, and Togo, undermining native producers in such powerful competitors as the Sahel. Or US concerns over the threat to the US steel industry posed by imports from Trinidad-Tobago.
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“Third world [finance] ministers who have painfully dragged their own budgets out of persistent deficit have been particularly galled by the failure of industrial nations” to observe the rules, the
Financial Times
reports. “Echoing the gloom felt” in the South, World Bank president Lewis Preston deplored the practices of the industrial societies, who demand that the Third World “bear the burden of [structural] adjustment in the rich countries as well as in their own” and repeatedly fail to live up to their promises to reduce protection and provide aid. After a meeting of high-level officials of the donor countries, “World Bank officials say openly” that “they will back away from” their promises once again. Even “once-generous donors such as Sweden” are cutting back, while “less generous countries, such as the UK and US,...are expected to cut still further” their minuscule contributions. A meeting of non-governmental organizations (NGOs) meanwhile concluded that “Structural adjustment imposed by the World Bank and [IMF] have brought disaster to the working poor of as many as 100 countries,” forced “to open their markets to a flood of cheap imports” while the rich refuse “to abandon their subsidies, quotas and high tariffs.” The result is “‘brutal' suppression of wages and living standards” and elimination of social programs, the effects increasing as the programs are implemented over the past decade or more.
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The institutions of “the new ruling class,” which now “run large parts of the developing world and eastern Europe,” “encourage” their clients to follow “the right kind of reform policy,” Morgan continues. They must scrupulously avoid the policies that have led to successful development from 17th century England to East Asia's “little dragons” today, keeping to “the right kind” that have been highly beneficial to the international ruling class, if to few others. And when economic controls do not suffice to “encourage” proper behavior, we can resort once again to the security forces.

The simmering economic crisis does not, of course, leave the rulers unburdened. But they can call upon state power to come to the rescue. When Continental Illinois Bank and Trust faced collapse in 1984, the government was expected to respond, and did, with “the largest nationalization in American history” (Howard Wachtel). The director who presided over the financial disaster, Roger Anderson, was punished by appointment to the Federal Advisory Council, where he became an official adviser to director Paul Volker of the Federal Reserve, which had refused to use its disciplinary and control authority as it observed the growing crisis. If the collapse of the Olympia and York real estate empire indeed causes the $3 billion of losses that the banks initially feared, taxpayers will again be called upon to render the proper services. Austerity may be the right remedy for Latin American peasants, Polish workers, and the forgotten people of South-Central Los Angeles; but not for the people who count.
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The government also has the duty of raising protectionist barriers when needed: for example, to allow the US steel industry, which arose in the first place behind protectionist walls, to recapitalize by effectively restricting steel imports to 20 percent of the market since 1982. At the same time, it has the parallel responsibility of undermining unions, so that new “low-cost, non-union producers” can pay their labor force between one-half and one-third of what steel workers had gained after a century of bloody struggle, and thus become “exemplars of the lean and mean” in the admiring words of the London
Economist
, echoed by the
New York Times
, which also lauds the success of the “decade of protection from imported steel” and the resort to “nonunion work forces” for lowering costs.
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One important achievement of the new imperial age is that it further marginalizes the general population, clearing the way to uplifting rhetoric about our democratic ideals without fear that the wrong people might take it seriously. The global rulers can now operate with fewer constraints, more coordination and central management, and less interference from the rabble, who not only have no influence over the decisions of the rulers (the basic principle of capitalist autocracy), but also lack any awareness of them. Who follows the crucial decisions of the GATT negotiators or the IMF, with their enormous impact on global society? Or of the TNCs and international banks and investment firms that dominate production, commerce, and the conditions of life worldwide? The North American Free Trade Agreement (NAFTA) will have large-scale consequences (a bonanza for investors, very likely a disaster for workers and the environment). Its contents are unknown. The text was withheld even from the Labor Advisory Committee, which is required by law to review such measures, until one day before its report was due. Congress abdicated responsibility. Citizens know nothing.
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For the past several hundred years, elite democratic theory has tended to range within a narrow spectrum. At one extreme, we have the libertarian thinker John Locke, who held that citizens have no right to discuss public affairs, though they may know about them; the modern variant is a bit more forthcoming (see p. 24). At the other extreme we have statist reactionaries of the Reaganite variety (“conservatives”), who reject the right of the public even to know what their leaders are doing and therefore establish illegal state propaganda agencies, favor large-scale clandestine operations, block release of information about the government even from the distant past, and in other ways protect state power from scrutiny. Reagan-era censorship reached unprecedented heights, including suppression of the documentary record so extreme that the chairman of the academic advisory board for the State Department resigned in protest. The new imperial age marks a further move towards the authoritarian extreme of formal democratic practice.
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